Readers' comments

I want to show you how unbelievable is the environmentals damage in China. 20 year ago, my hometown people can wash clothes, and swim in the river near our village, then the river is dumped with different industrial wastage mainly from a so-called biggest paper miller. Now I am forcely awakened by the extremely loud roaring of the garbage truck just under my window.
And you can not believe that I am living in Shanghai, the so-called international cosmopolitan. I wrote a letter to the mayor because when I reflected this condition to related local governors who are very rude and don't care. what's is ridiculous is that the letter is answered:" to be handled by the related local governor" Don't you feel crazy? All the governors don't care about how live but is like robbers to take your taxes every day. It's like when you suit a criminals, the judge say:" you go to deal with the criminals yourself"

I always think that since I am a little child, how is the communist party so cool, they only want to tax. my dead is a teacher, at that time he wasn't paid for free teaching, when he had a big family to raise. It only depend on my grandpa who had a small business, talking about small business, you can't image how hard it is, it isn't because my grandpa wasn't capaple, on the cotnrary, he is very smart and hard-working, because the local government need brube, orelse you can't survive your business.

My grandpa died of cancer, my grandma died of a serious illness. 20 years ago, ppl died natrually, then much more ppl died of cancer because of environmental pollution.

I felt the worst thing is that I was born in a time that a corrupted and monster government ruled this country.

Who lived most happily in China? Let me tell you those communist governors who have prority based on exploitation to the most kind-hearted labors in China including me who is doing an international trade job.

All nations have to go through industrialization to develop, and pollution is unavoidable. The River Thames was a lot dirtier than any river in China today, during England's first 100 years of industrialization. So there is hope yet - as China gets richer, pollution will be taken care of.

The bottom line is life expectancy at birth. That in China has steadily improved since 1950. What started out at 41 in 1950 is today 73.5 (2011), just a couple of years behind Europe.

It clearly shows improvements of an overall plan to care for the masses. China in the last two years implemented a national health care system that covers over 95% of the 1.3 billion population. Methinks the prognosis remains optimistic.

Zhubajie is mistaken, historically China became part of Mongolia under Kahn leadership through military conquest, Mongolia did not become part of China. Disease among the Mongol troops saved the south of China from complete Mongol assimilation. Islam, through Mongol influence, began to spread in China at this time. Talk to any Mongolian person, including inside China, and they have the correct view of history. Hans tend to have a self-serving and nationally skewed view of the past.

The WB report also does not talk enough about the TPP, especially the UNPUBLICIZED features of the TPP, and its effect on China's development in the coming decades.

The biggest danger facing China in the next two decades is the TPP.
No, not from being excluded from it - the danger lies in being bamboozled into joining it.

All that talk about free trade and standards, is anything but. Today, merchandise trade is no longer the focus.

America had already chosen an industrial policy for the post-industrial world. In place of pushing particular technologies, America, with bipartisan support, chose ultra highly leveraged FINANCIAL ENGINEERING as a post-industrial era "industrial policy", and in the last 15 years has staked the policy with the full faith and credit of the nation, and the best minds the country can offer.

Bloomberg reported the size of the derivatives casino reached US$700 TRILLION (50 times the American GDP) by June 2011. When you consider that the American banking sector has only $16 Trillion in total balance sheet assets, gambling at this level of $700 Trillion (about 44 TIMES assets) is RECKLESS. And yet Washington acts as if the irresponsibility is a good thing. This festering financial cancer is affecting not only America, but the entire world.

Today, American banking is synonymous with "trading", mostly in unregulated OTC derivatives. I believe it was reported that B of A made 90% of its profits in 2010 on trading; the number of SBA loans made also dropped very substantially from previous levels. American banks don't bank (lend) anymore, they trade. They are not really banks anymore, but malignant forms of their former selves.

There is no sign of abatement, even after the 2008 debacle. With the American mutual funds industry now (year end 2011) pushing for massive adoption of derivatives, and the Commodities Commission promulgating regulations to allow the small guys to join the fun, the derivatives casino is going to be US$1.5 QUADRILLION in no time. That would be 100 times the size of the American GDP, and more than the entire world's total GDP!! That is sheer MADNESS.

What is scary is that many in Washington believe that there is method (and good) in that madness. They are counting on this high leverage (14.7 Trillion GDP? Chickenfeed. America will have $700 Trillion going on to $1.5 Quadrillion!!)

The 2008 debacle complicated things a bit. The world witnessed how even 100 year old financial houses can go belly up overnight with derivatives gambling. Lehman Bros. had $60 Billion of derivatives on its books, lost 3% or $2 Billion, which wiped out its equity. WHAT is the significance of that? 3% of $700 Trillion is $21 Trillion, which is more than the TOTAL equity of ALL American financial companies. AND you would never know when it would hit, or even which bank it might hit. MF Global is just the latest example - total wipeout with very little prior warning - something to be routinely expected when gambling with a leverage of over 50 times equity.

After 2008, both Germany and China ordered their banks to stop massive gambling in derivatives. Both of their economies recovered. America bet the farm, and counted on EXPANDING the scope of the casino, betting heavily that (a) in the name of FREE TRADE or other trade arrangements (such as TPP), other countries will be forced to open their markets to this contagion, and (b) the American banks would always win HUGE against foreigners, as they did in the decade before.

The $7.77 TRILLION in subsidies (in the form of no cost or very low cost loans) to the American banking industry also complicated things (Bloomberg reported the practice after 2 years of FOIA requests). Now the foreigners are going to point to that as an violation of WTO rules, and refuse to allow the American banks to come in and maraud.

As an aside, against that backdrop, disputes over merchandise trade (a billion here, a few hundred millions there) are rather irrelevant.

The real economic "battleground" in this 21st century is going to be over industrial policies in a post industrial world - mostly over the financial industry. Eyes will converge on the unpublicized features of TPP, requiring the removal of government control over things like capital flow (thereby removing sovereign protection against financial looting).

By 2010, America's "banks" had profits of $1.4 Trillion. Since NOTHING is produced out of that $700 Trillion in derivatives gambling, that wealth is sucked out of the Real economy. In order for this fraud to be sustained, American banksters NEED foreign national banks and major foreign financials to be open to the marauding. What better victims than central banks of foreign governments that rely on the good graces of the American military?

The WB report seems to be focused on what IS today, without visionary proposals on what COULD BE.

How does China sustain 8 or 10% growth for the next few decades? WHAT are China's sustainable comparative advantages? Sorry to say it is not high tech per se (does not employ enough to keep the economy chugging along - at best growth similar to developed nations like Japan, America, etc.). I submit the key advantage that China enjoys, is expertise in systemic COST DOWN, and INFRASTRUCTURE. The WB report is seriously deficient in exploring the possibilities along these lines.

WHAT are the opportunities in cost down and infrastructure that can drive decades of growth? The biggest one appears to expand contiguous markets.

2030 may be too close (only 18 years away), but no future planning (armchair planning here) can be complete without considering as one of the alternative a Federated Union, especially with neighboring entities that are natural complements of what China has to offer.

I would make a commercial analogy – a product line past its prime, or never did reach its potential for whatever the reason; a new buyer comes in, injects additional resources, and makes the pie 10 times larger. Everyone gets more.

With the return of Hong Kong and Macau, Deng put forth "One Country, Two Systems" (actually it is as many systems as there are SARs). That was a historic strategic move.

One model for a FEDERATED UNION: Imagine a contiguous region with united responsibilities on defense and central banking, but with regional control over local governance issues, such as the choice of officials (the locals get to decide whether they want multiple political parties, and whether they want elections). The goal is to put trade and commerce on hyperdrive, benefiting all who live there and more.

Of course the guiding methodology has to be by pull (incentives), not by push (military force).

That can solve N. Korea's food shortage problem, completely defuse the N. Korean nuclear arms issue, and open up direct access for China to the Sea of Japan and beyond (and not just the one port currently). The model can be repeated in various forms with Mongolia, and maybe even Taiwan.

Heck, the results would be so good mayhap others would like to join too - Myanmar would be a good candidate. If the Russian East ever decides to go independent, that might be a candidate also. Maybe even Japan and S. Korea.

The combination of resources, and the resulting geometric growth in trade, would greatly lower military tensions in Asia, and jack up GDP for all geographical entities involved. Just think of all the tens of trillions of dollars of infrastructure work that would come out of the union!!

Take Mongolia, historically part of China (under the various Khans). The CIA facts show a 2011 population of 3.13 million, and a 2010 GDP of $6.125 billion.

Mongolia is landlocked (so what if it has lots of minerals, they can't be airfreighted out); and it has terrible management. Average household income is like $2,000-3,000 a year. If Beijing goes in with an invitation for Mongolia to join a Federated Union, by offering US$50,000 (this is close to a lifetime of current income per family) upfront per head (which comes to US$160 Billion), commitment to invest another US$200 Billion for development, plus setting up a trust fund that pays 10% of all mineral extractions to the natives, now that'd be something to talk about. Local politics would still be left to the locals. The new money and new spendable wealth would most likely all be spent locally and regionally, and it would further benefit growth to the regional economies.

Beats buying stocks in Blackstone or Goldman Sachs.

It is quite unlikely that this can be accomplished by 2030. But contingent plans should be in place.

I have not read the “China 2030”, but from the jest as digested by the Economist articles, I am of the opinion that the WB report is both a gallant effort to advise for heightened reform on the part of World Bank and DRC, and at the same time unknowingly a proposal of Trojan Horse stuffed with potential unmitigated-able major risks sugar coated in the name of deeper reform.

Apparently what was not taken into account in the WB/ DRC analysis is that despite its unprecedented success and record setting economic prowess, China is still very much a developing economy. China can not and should not be considered a true power unless it measures up in 1). Per capita GDP (not in ppp), 2). Accumulated infrastructure investment and 3). Total net asset of its industrial base of manufacturing and services. China still falls far short in all these three areas as compared to the US, EU and Japan.

Despite all the superhighways, high speed rails, dams and bridges being the talk of the town, China is actually much behind in the investment of infrastructure and public facility (schools, hospitals, libraries, sanatoriums, .orphanages,… etc.) as compared to international scene. Put in another way, China is not yet ready to pass the equivalent of banks' pressure test. For the moment, China should not be talked into concentrating its economic growth by jerking up internal consumption without further enhanced investment in infrastructure.

In other words, there are things these developed economies can do but China can not do, and there are positions these developed economies can lean on and leverage heavily but China should not attempt to venture to hold. China currently simply is not and can not be on leveled ground with the developed economies to compete even if all the rules and regulations of fair play are followed by all parties involved.

In a nutshell, China is not ready for full blown/ free to all style of liberalization in international commerce and China should continue to strengthen its economic growth on infrastructural investment, not lessening it in lieu of merely domestic consumption.

Granted that reform and opening up is an unwavering national policy of CCP governance on which many of China’s successes are based. Yet as China is getting nearer to its hard earned pinnacle positions in areas of these successes, the complexity and intricacy of handlings the international commerce and politics are drastically multiplied than before. China must learn the rope to be ready to protect itself from being wiped out of its economic gains and abstain from the temptation of “full reform” before it plunges into the enticing opportunity and uncertain risk of opening the floodgate for free flowing of international financing and money into and out of China.

For example, free conversion of Chinese currency RMB is a Chinese goal and also much pressured objective from others. It requires near free movement of capital money across China’s international border among other things. This calls for sharpened focus, sophistication and finesse in international money handling in regulation, monitoring and deal making that IMO China at the present is no match to its Western counterparts who has in store plenty of fancy and heavily leveraged financial products like derivatives of n-th order, honed in the consummate international game playing in the tradition of say, Rothschild, Oppenheim, Morgan and Rockefeller.

There are reforms that should be taken right away, and there are ones just can not be hurried before their time. As late actor Orson Welles famous by line says for a commercial: "We will sell no wine before its time."

That perhaps is a best advice for China's opening up on banking and finance, IMO.

Customarily in this month, China’s Two-Conferences assembles in Beijing. At this time, the most obvious difference from the past meetings is the lower annual target of economic vision, predicted by China’s Communist Party (CCP). At this critical point, Chinese fast-growing economy is predicted to experience the next period of development. Owing to the coincidence of the World Bank president’s handover in this summer, the co-pictured photo, containing China’s next prime minister Li Ke-qiang and incumbent president Robert Zoellick, make this month’s meetings more important than ever before.
There are individual meanings of inside and outside CCP’s politics or Chinese economy in this time’s meetings, including several sensitive issue of economics and political rule’s reform. First, the successor of National Congress’ chief in the standing committees will lead Chinese to represent the sovereignty. According to the order of the fifth-generation CCP, Wang Yang may succeed Wu Bong-guo as this position while princeling party’s counterpart, Bo Xi-lai, may play the similar role to 2005’s Zhou Yong-kang to China’s incumbent President Hu Jing-tao in the alteration of generation although Bo and Hu hates each other for a long time and more horribly than Chen Liang-yu and Hu.
Second, China has more prominent profiles rising in the world from the development of opening economy until the upcoming second peaceful transition of Beijing’s power. Seen as the propeller of world economy, China is standing at the turning point of economics evolution and facing the unavoidably fateful rise-fall circle. The preview of cross happening between per-capita GDP and the percentage of GDP growth, according to World Bank-DRC report, infers that, about 2030, there will be a tendency for Chinese economy to have soft-landing, based on the loose definition, 5%, of the line whether there’s high or low growth. By the way and for this reason, I guess Lin Yi-fu, the Asian vice-president of World Bank, has the ability to take over from Mr. Zoellick. With reference to CCP’s customary order of seat, Hu Chun-hua and Zhou Qiang might be CCP’s leaders next to Xi Jin-ping and Li Ke-qiang.
Besides, through China’s sign of Free Trade Agreement (FTA) with South Korea and so on, China expand her impact on the Asian-Pacific Region improving the excitement of Foreign Direct Investment (FDI) while United States wants the expansive surroundings of Trans-Pacific Partnership agreement (TPP). The currency against U.S. Dollar and the engagement in Euro Crisis can be talked of when it comes to this year’s predictable inflation, about 4% by prime minister Wen Jia-Bao’s statement two days ago, and inequality in China between rich and poor adding to inner land and coast. China’s leaders from fourth to fifth generation’s CCP, very early, knows the importance of structural reform in order to keep the social stability. Moreover, from Lin Yi-fu’s writings, collaborating with Dr. Tsai Fang, “Chinese Economy” published by Mcgraw-Hill in 2003, whether China can benefit the world depends on the Chinese economics’ health along with the solution to the poor in farm with urbanization. Of course, the aging society in metropolitan will be a big problem in near future.
And the possible inner rebel and democratic reform are also potential problem in China. As some previous example of developing countries, Philippines in 1980s, the corrupt Ferdinand E. Marcos, who lacked of the recognition of the transition from farming to industry and financial concerned, took the measures against capitalist theory only to make the local education, economics order and law system seriously collapsed at least twice along with the Islamist-rebellion in Southern Philippines.
To be the rich country in fact like Japan and United States, Beijing may be aware of this kind of lesson in case of the inessential troubles or falling into myth of the past rise-fall circle. Since Bashan-ron in 1985, China spends nearly one generation working very hard making her economy double at least three times so that China walks constantly. With the re-evaluation of bureaucracy, enterprises, as well as financial law’s (tax) role, the establishment of stronger system must become certain in the short time - at least before this autumn’s China’s central Committee opening. Rather than India’s lower than 7% and Brazil’s only 2.7% claimed yesterday, I still have confidence of China’s 8% highly sustainable economic growth in 2012.